The primary surplus is an important economic index that is frequently cited by newspapers and news portals. Especially those attentive to financial information, which concern the administration of the State’s economy.
The State, even if it is not a private company, must still keep all its expenses under control, so that the economy can flow without major problems.
The phrase “the State never speaks” is popularly known, and in fact this is something quite difficult, but it still does not mean that the State should treat its revenues and expenses with light hands and little importance. In fact, the State, like any company, must take good care of its results and consider expenses and earnings. Come and understand more about how it works!
What this article covers:
What is primary surplus?
The primary surplus is an initial result, observed by the State’s accounts when they have a positive result. To reach the primary surplus, the State’s revenue must be positive, even after deducting all its expenses, except interest, from the amount of finance that the government collected.
The primary surplus is this result when it is positive, that is, the account closes and the State has enough balance to pay its expenses. Not only to pay your expenses, but also have enough balance to work for countless other events, processes and situations.
What is the objective of the primary surplus?
The primary surplus is a result in itself, the result demonstrates a positive balance of the State’s accounts. The calculation to arrive at this result is aimed precisely at verifying whether there is a surplus or a deficit in the State’s accounts, so that the government itself is much more attentive and prepared to deal with its finances and possible particularities brought about by them.
What are the advantages of primary surplus?
There are numerous advantages in relation to the result of the State presenting a primary surplus. The first is to know that the State will certainly be able to pay its bills, honor its expenses and finally be able to function properly, without having to default or borrow funds. This result is not only important for the State as an institution, but for the whole country.
When the State presents the primary surplus, it is sending a message to possible investors from all over the world that the country’s economy is doing very well and is able to remain warm for a longer time, the primary surplus, in fact, is a much desired result by the State as soon as it begins its calculations, and the entire way in which the State deals with its expenses, expenses and collection is oriented towards reaching the primary surplus.
The more positive the result of the State, the better the country’s economic situation, at least it is much safer, more stable and this represents a fertile and coveted scenario for potential investors, both domestic and foreign. Therefore, the primary surplus is an absolutely spectacular and necessary result.
How is the primary surplus calculated?
The calculation to arrive at the primary surplus it’s not exactly complicatedit refers to just a simple calculation, which puts the bills and expenses of a State on one side, disregarding possible interest that will be accounted for in the future.
On the other hand, it takes into account the result of State revenue and everything that the institution collected. That is, the result of the calculation is exactly the relationship between income and expenses, almost like a traditional balance sheet.